Mortgage News & Information - Issue 42, 9 November 2011

Market View

Barclays urges homeowners to take action

The UK is a cost-cutting nation with 92% of homeowners currently trying to reduce their monthly outgoings.

Yet new research from Barclays is warning that Brits are ignoring how they could cut one of their biggest monthly outgoings - their mortgage.

Instead they are focusing on cutting back spending on takeaways, clothes and using discount vouchers at the tills missing what could be their biggest savings opportunity.

The research shows that there is a clear disconnect with people failing to realise how much they can actually save by swapping their mortgage.

A staggering 58 per cent of homeowners say they have never re-mortgaged outside of moving home but the majority (74 per cent) said that if they could save up to £50 a month they would consider doing so.

Those polled thought swapping a mortgage could save them around £10 a month, but Barclays calculations show re-mortgaging could save homeowners much more.

With homeowners living in their homes for on average over 16 years, they are potentially missing out on years' worth of decreased mortgage payments.

Lloyds Banking Group - Britain's biggest mortgage lender yesterday reported a surprise fourfold increase in losses from families defaulting on their home loans.

Lloyds Banking Group provides mortgages to one in five British homebuyers and revealed mortgage loan impairments of £416 million for the first nine months, compared with £108 million in the same period of last year.

While the level of arrears and repossessions has been relatively stable, Lloyds said it was taking a gloomier view of the prospects for house prices, which ultimately determine how much it can salvage when it repossesses a property. The bank estimates it has outstanding home loans of £38 billion to borrowers who are in negative equity. Of these, borrowers owing a total of £3.1 billion are three months or more behind in their interest payments.

3-month Libor has increased slightly to 0.99%

Lender News

Barclays, through its mortgage arm Woolwich, is extending its range of fixed rate mortgage deals to 90% LTV from tomorrow, including a fee-free three year fixed rate at 4.99 per cent. These are designed to help more customers get moving or remortgaging with affordable mortgages.  

The 90 per cent range also includes a five year fixed rate at 5.49 per cent with no application fee for customers who qualify for a Barclays Loyalty mortgage and a low £499 fee for all other borrowers. All the deals revert to a lifetime tracker of 3.39 per cent above base after the fixed rate period ends. All 80 and 85 per cent LTV mortgages will be maintained at their current rates.

Aldermore has unveiled a mortgage specifically designed to help first time buyers get a foot on the housing ladder.

The 'Family Guarantee Mortgage' is available up to 100% LTV. The mortgage has a three year fixed rate of 6.48% and parents, step-parents or grandparents will be asked to provide a guarantee secured against their residential property for the amount of loan above 75% LTV.

Loans are available on a repayment basis only (no interest only); the maximum loan size is £250,000, and the minimum age of the borrower must be 25. There is a non-refundable booking fee of £299 and a completion fee of £999.

Charles Haresnape, Managing Director of Residential mortgages at Aldermore, said: "Family support in the form of gifted deposits has become commonplace and is widely accepted by most lenders. The Aldermore Family Guarantee Mortgage gives much greater flexibility, enabling guarantors to retain savings and instead provide a guarantee, requiring no cash deposit."